Carlsbad desalination plant gets final OK

Overview

What happened: Coastal commissioners approved the final permit to allow construction of a desalination plant in Carlsbad.

What's next: The developer will begin preparing the site next week, and hopes to begin desalinating ocean water by 2012. But difficulties remain, and it's unclear how they will affect the timetable.

After an 11-year effort, the developer of an ocean-water desalination plant received its final permit and will prepare its Carlsbad site for construction next week, although several challenges remain before it can pump out 50 million gallons a day of drinking water.

The California Coastal Commission yesterday permitted Poseidon Resources to build the plant, the largest in the Western Hemisphere.

Carlsbad Mayor Bud Lewis, who championed the project as mayor and now as chairman of the San Diego County Water Authority board, called the moment historic.

“Once the plant is built and people see they can get water from desalting (ocean water), you'll see more of these built on the California coast,” said Lewis, who first discussed desalination with Poseidon officials in 1998.

Desalination gives the San Diego region access to a new water supply as it struggles with a three-year drought and limits on drawing water from Northern California through the Sacramento-San Joaquin River Delta.

Lewis said he has sought a drought-proof supply for his city and the region since the drought of the early 1990s.

The plant will turn Pacific Ocean water into enough drinking water for more than 100,000 typical households.

With the Coastal Commission permit in hand, Poseidon has met all its regulatory requirements — two years after the Coastal Commission conditionally approved the plant. Poseidon had to satisfy 17 permit requirements before it could begin construction.

Peter MacLaggan, Poseidon Resources' senior vice president, said the coastal permit requires that construction begin in less than two weeks. He said the company next week will start clearing the site, on the grounds of the Encina Power Station on the south shore of Agua Hedionda Lagoon.

But the company has a long way to go before the plant produces potable water, which it expects will happen in 2012.

Poseidon must line up $530 million in financing and has applied to the state to receive tax-exempt status for bonds it will issue to pay for construction. Plant and pipe construction are expected to cost about $360 million, MacLaggan said.

Also, environmental groups have challenged Poseidon's permits on several grounds.

Marco Gonzalez, an attorney for the Coastal Environmental Rights Foundation, said the group objects to Poseidon's intake, which uses the power station's open-water channel. The power plant uses the water to cool its steam generators.

“The only reason regulators are allowing this is because of the Chicken Little mentality that the sky's falling in — we're running out of water and this is the only place to get it,” Gonzalez said.

“They're sucking in water using old technology,” resulting in many fish and small organisms being pinned and crushed, he said, adding, “They should use new technology and pay the price.”

San Diego Coastkeeper, the Surfrider Foundation and the Coastal Environmental Rights Foundation say Poseidon misrepresented facts regarding the number of fish that might be killed as water is drawn into the plant. They have asked the Coastal Commission to revoke its permit, saying it was obtained based on false information.

Tom Luster, a Coastal Commission scientist who reviews desalination projects, said the standards for revoking a permit are high and that it must be proved that Poseidon intentionally misrepresented data.

“We're going over everything to determine who knew what when, and we'll prepare a staff report and recommendation to the commission,” Luster said.

MacLaggan said, “It's our expectation that the staff of the Coastal Commission will not be recommending . . . revocation.”

A hearing is expected in December.

Other challenges regard the permit issued by the San Diego Regional Water Quality Control Board, and an amendment to the plant's environmental impact report that the Carlsbad City Council approved in September.

Poseidon might withstand those challenges, but its chances to secure financing could be hurt in the process.

“I don't think they'll be out of the woods till they get the bonds, get the money,” said Tom Pankratz, editor of Water Desalination Report, which tracks the desalination industry.

MacLaggan said the company hopes to land financing by the end of the year and begin full-scale construction early next year.

Poseidon also needs approval from the board of the Metropolitan Water District of Southern California for a subsidy of $250 per acre-foot of desalinated water. That subsidy makes desalination cost-competitive with other new sources.

The board approved giving the county water authority that subsidy in 2005, with the understanding that the authority would pass it on to Poseidon. The board is due to make a final decision on the subsidy next week.

The plant will draw 100 million gallons a day from Agua Hedionda Lagoon and turn half of it into drinking water.

Nine water agencies, including Carlsbad's, have signed up to buy the water. Their agreements state that they will pay no more for the water than they pay the county water authority, the region's wholesaler, for water it imports from the Metropolitan Water District.